Australian-listed UXC Limited has on Wednesday entered into a binding Scheme of Implementation agreement to become a wholly owned subsidiary of IT services provider Computer Sciences Corporation (CSC), with CSC to acquire 100 percent of UXC's issued capital.
Initially, CSC proposed to pay AU$1.26 per share with a fully franked dividend of AU$0.02 cash per share, however this amount has been recalculated based on US GAAP and Australian accounting standards and CSC has proposed to pay AU$1.22 per share with no change to the dividend for the half year ending December 31.
Based on 345 million UXC shares, the total value of the transaction would be approximately AU$427.6 million upon completion.
"Following careful consideration of the revised proposal, the UXC board recommends that shareholders vote in favour of the scheme," UXC told shareholders.
"While we have always maintained that we are a strong independent company with a great track record, the board believes that the proposal received from CSC represents an opportunity for UXC shareholders to crystallise the value of their holdings in a time frame that would not otherwise be available."
Cris Nicolli, managing director of UXC, said the combined CSC-UXC would be among the region's largest IT services companies, based on revenues. According to CSC, when completed, the acquisition will broaden CSC's market coverage and product offerings, with an expanded client base and deeper industry expertise.
"The proposal from CSC recognises the potential of UXC and is a testament to the strong business we have built; the board of UXC is supportive of this move," Nicolli said in October. "All of us at UXC are tremendously proud of what we've achieved to date, and the proposal from CSC represents a potential next stage in the evolution of our company."
In October, Nicolli announced his retirement following a 12-year tenure with the firm, which included five years in the chief's position. At the time, UXC said if the CSC acquisition were to not go ahead Nicolli would stay on as managing director and CEO of UXC until an appropriate successor could be found.
For the 12 months ending July 3, 2015, CSC reported revenue of $11.7 billion and an employee base of 70,000; and for the financial year ending June 30, 2015, UXC posted earnings before tax of AU$42.1 million, as well as a net profit after tax of AU$23.1 million, and AU$686.4 million in revenue.
UXC said the proposal remains subject to several conditions, including shareholder approval, an independent expert opining that the scheme is in the best interests of shareholders, and court approval by the Supreme Court of Victoria.
The transaction date is still on track for February 2016, and a scheme meeting has been pencilled in for the same month with shareholders able to cast their vote on the revised proposal at this time.
KPMG Financial Advisory Service Australia has also been appointed by UXC to act as an independent expert overseeing the deal.
"We look forward to the prospect of the UXC team joining CSC," Mike Lawrie, CSC president and CEO, said.
"The addition of UXC would continue the process of rebalancing our offering portfolio and strengthening our global commercial business. UXC's application platform capabilities -- combined with CSC's existing strengths in cloud, cyber, and big data -- would enhance what the two companies already deliver to clients in the region."